Four investor types populate Gilligan's Island

The story started decades ago on college campuses and gained steam on the Internet.

As the theory goes, the TV series' characters represented pride (the Professor); lust (Ginger); envy (Mary Ann); greed (Mr. Howell); sloth (Mrs. Howell); and anger and gluttony (the Skipper). That leaves Gilligan, who always wore red and whose blunders kept them all trapped on the island, in the role of the devil.

Forgive my shameless resurrection of this ridiculous analogy, but it jumped to mind recently when Merrill Lynch & Co. Inc. announced results of a survey identifying four investing personalities and matching them to their likely downfalls.

Analyzing 1,000 investors' responses to questions about investments and mistakes, Merrill and its research firm identified four basic investor personality types (14 percent didn't fit neatly into one category):

Measured investors (32 percent) are secure in their financial situation and rebalance regularly but often become so wedded to their own philosophy that they can't admit their mistakes and let go of losers. Hello, Professor.

Competitive investors (17 percent) are the Thurston Howells and Gingers of investing. They are confident and rebalance regularly, but also have a tendency to chase hot stocks and become overconfident and greedy.

Reluctant investors (26 percent) can't be bothered with the drudgery of investing and make long-term errors by waiting too long to begin. Lovey, this is you.

Unprepared investors (11 percent) don't know what they don't know. Still, they are very likely to chase a hot stock, are unhappy with their current situation and lack self-confidence. I'd say Mary Ann, with her naive exterior but jealous heart, fits this bill.

And Skipper's gluttony was the granddaddy of them all. Overall, 46 percent of investors said they waited too long to save, choosing today's consumption over rainy-day planning.

Incidentally, reluctants were the dominant category for those making less than $100,000 in annual income; unprepareds led the group making $100,000 to just below $150,000, and competitives accounted for the biggest number of investors earning more than $150,000 a year.

"In most human endeavors, individual psychology affects behavior and, ultimately, results," said Robert Doll, president of Merrill Lynch Investment Managers. While his initial view was to try to banish emotions from the investing process, Doll said this is an impossible task.

Instead, advisers should try to help investors avoid major mistakes at the extremes - acting solely on greed at the top of the market and fear at the bottom, Doll said.

So who or what is the Gilligan in your life keeping you in a place you don't want to be, and what can you do about it?

Not surprisingly, Merrill Lynch says employing a financial pro will help you curb your biases.

Indeed, 38 percent of investors said they let their emotions get the best of them when asked for factors that contributed to their biggest mistake.

But 64 percent said no reason in particular was responsible for the error, that mistakes just happen. And nearly two-thirds said it was because they didn't do enough research themselves or got bad advice from a professional.

You can take the quiz at www.hindsight2insight.com. Stack the results up against your portfolio's performance.

My own take: If you come out a measured investor, focus your energy on constructing a sell discipline. Write it down and plan to use it every time you rebalance.

Unprepareds and reluctants need to get off the couch, track their spending and start saving aggressively. Consider low-cost index funds, exchange-traded funds and age-weighted retirement accounts. Even if you hire a professional, you still need to know enough to keep an eye on the ball.

Competitives need to be reminded they are human. That's what family is for, but I guess financial pros can do it, too.